Corbion Momentum to improve, cash generation underappreciated

Despite the weaker than expected 1Q results, impacted ao by a tough comparable and phasing effects, top and bottom line momentum should build in the coming quarters. Despite the increasing inflationary pressures from ao sulfuric acid (used in lactic acid production) and transportation, Corbion is well hedged on its key raw material, sugar, for the remainder of the year. We remind that Corbion is implementing its BRIGHT 2030 strategy which entails an increasing focus on clean label Food Ingredients, Nutrition and Biomedical Polymers/Pharma. Biochemicals are being de-prioritized and Corbion intends to sell its stake in the PLA JV with TotalEnergies. Mid term financial targets include a 3-6% annual organic sales growth target and a c 2pp increase in the adjusted EBITDA margin by 2028. A disciplined approach on capex is expected to result in an average FCF yield of c. 9% in the next three years with a strengthening balance sheet that creates room to give excess cash flow back to shareholders. Corbion remains a global powerhouse in lactic acid with sizeable growth opportunities. With valuation clearly discounted vs other ingredient peers, we maintain our BUY rating and € 26 target price.